M/S Bhuvaneswari Medicine House vs. The State Of Andhra Pradesh

Held

The Court held that the impugned assessment order was liable to be set aside on the sole ground of gross violation of the principles of natural justice. The petitioner, in its reply to the show cause notice, had specifically sought the third-party information from IMS and the documents enclosed with DRC-01, raising an objection that withholding these relied-upon documents violated natural justice. Although this aspect was mentioned in the impugned assessment order, the respondent failed to deal with it, either by denying the allegation or recording any adverse finding. Consequently, the Court set aside the impugned order and remanded the matter back to the respondent. The respondent was directed to pass a fresh assessment order in accordance with law after providing the requested information and documents to the petitioner. The petitioner was also granted liberty to submit an additional reply upon receiving the information, which was to be duly considered before any fresh order was passed. The Writ Petition was allowed with these directions.

Facts

M/s Bhuvaneswari Medicine House (the petitioner) filed a writ petition challenging an assessment order dated 24.03.2026 passed by the Assistant Commissioner (respondent No. 2) for the period July 2017 to December 2019. The petitioner's business operations had halted due to the death of its Managing Partner. Previously, a writ petition challenging an earlier assessment order was allowed on the ground that it lacked a Document Identification Number (DIN). Subsequently, the respondent issued a notice alleging that supplies made to Insurance Medical Services (IMS) were not reported in the petitioner's GSTR-1 returns. A show cause notice followed, attaching data of 72 invoices. The petitioner filed a reply stating all invoices were reported and taxes discharged. The respondent then demanded documents evidencing physical movement of goods for these invoices, proceeding under Section 74 without allegations of fraud.

Key Issues

1. Whether the continuation of proceedings under Section 74 of the CGST Act, in the absence of allegations of fraud or willful suppression of turnovers, is without jurisdiction and authority, thereby rendering the impugned assessment order invalid? 2. Whether the withholding of relied-upon documents (RUDs) obtained from IMS by the respondent, despite a specific request by the petitioner and an objection raised regarding the violation of principles of natural justice, vitiates the assessment order? Petitioner's arguments: The petitioner argued that the respondent's action of continuing proceedings under Section 74 without a basis of fraud or willful suppression was without jurisdiction. They also contended that the respondent's failure to provide the third-party information obtained from IMS and the documents enclosed with DRC-01, despite a specific request and objection, constituted a violation of the principles of natural justice, rendering the assessment order liable to be set aside. Respondent's arguments: The respondent argued that the assessment order was passed after affording an opportunity of hearing and examining the material on record, and that the respondent was satisfied that there was a willful suppression of turnover by the petitioner, referencing relevant paragraphs in the show cause notice.